Cambridge University Press 978-1-107-02612-4 - Time-Limited Interests in Land Edited by Cornelius van der Merwe and Alain-Laurent Verbeke Excerpt More information part i Introduction and context © in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-02612-4 - Time-Limited Interests in Land Edited by Cornelius van der Merwe and Alain-Laurent Verbeke Excerpt More information © in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-02612-4 - Time-Limited Interests in Land Edited by Cornelius van der Merwe and Alain-Laurent Verbeke Excerpt More information 1 Setting the scene raffaele caterina 1. The scene Every modern legal system recognises, besides perpetual ownership rights, time-limited interests in land. There are many reasons why people may wish to deal in rights that are limited in time as opposed to dealing in perpetual rights. The acquirer might simply not be interested in a per- petual right, for instance, because he/she knows that he/she is going to leave for another country in a few years or because financially he/she may not be able to afford to buy a perpetual right. Looking at things from the perspective of the grantor, he/she may be interested in realising financially some of the value of the land without giving up his/her right to live there until his/her death. Alternatively, the grantor may be inspired by his/her concern for his/her family. For instance, the grantor may wish for his/her younger sister to live comfort- ably in his/her house until her death, but the grantor may also want to ensure that at her death all of his/her property will go to the grantor’s son. Simplifying all of this, one may see two fundamental rationales for creating time-limited interests in land: first, ensuring a more efficient exploitation of land and second, providing for the personal needs of the creator or for someone he/she cares for. The first rationale usually requires that the limited interest’s duration is fixed in time. The latter is more compatible with lifelong limited interests. Lease, superficies and emphyteusis can be seen as examples of how to achieve more efficient exploitation of the land, whereas usufruct and life estate (liferent) are good examples of how to facilitate the personal needs or wishes of the creator. Recognition of the fact that most of these needs can be met to some extent by the law of contract is important. However, the contractual 3 © in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-02612-4 - Time-Limited Interests in Land Edited by Cornelius van der Merwe and Alain-Laurent Verbeke Excerpt More information 4 introduction and context solution is not entirely satisfactory, since contracts create only personal rights. This introduces an element of risk: if the land is alienated, the personal time-limited interest will not be enforceable against the new owner. On the other hand, creating real time-limited interests in land can be problematic. It makes the circulation of land more difficult. This is especially true for lifelong time-limited interests. The time-limited interest holder cannot transfer any better title than he/she has him- self/herself. Thus alienation of his interest is very difficult because the acquirer will have an interest measured by the life of the original holder. This is certainly a precarious (and somewhat illogical) position. It is evident that an interest measured by someone else’s life is not very appealing to anyone. Consequently, the time-limited interest’s holder will encounter great difficulties in trying to sell it or use it as a security to borrow money. Furthermore, any agreement with the future holder is particularly difficult because there is an element of uncertainty about the duration and thus the value of their respective rights, and negotia- tion tends to be easier when the rights involved are clear. These needs and problems more or less define the outlook of time- limited interests in land in all contemporary legal systems. What is very much different is the theoretical conceptualisation of the different rights. Some legal systems see absolute ownership as something radi- cally and qualitatively different from time-limited interests, which are, together with praedial servitudes, considered as iura in re aliena. This is generally considered to be the Roman law solution, and is the prevailing view in modern civil law jurisdictions. Other legal systems put perpet- ual and time-limited rights in the same class. A different conceptualisation was adopted by English law, which has divorced ownership from land itself and attached it to an imaginary thing called an estate, which entitles the owner to use the land for a longer or shorter period of time. The time-limited interest is thus seen as an estate in land, which differs from the perpetual fee simple only in quantity. It should be noted that a partially similar solution was adopted by the continental legal systems in the age of the ius commune, when emphyteu- sis, superficies and locatio ad longum tempus were considered dominia utilia. The summa divisio between absolute ownership and limited real rights is largely the product of the rebirth of the Roman law doctrine of owner- ship. However, the reality that the scholars of the ius commune tried to put into the Roman schemes was substantially common to all European © in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-02612-4 - Time-Limited Interests in Land Edited by Cornelius van der Merwe and Alain-Laurent Verbeke Excerpt More information setting the scene 5 countries. It has been said that ‘la Common law a re´siste´ a` l’influence romaine; son droit de la proprie´te´ foncie`re, construit sur la base des structures fe´odales et des institutions normandes, rappelle l’organisa- tion complexe du droit me´die´val franc¸ais’.1 A second, more specific point of theoretical difference concerns lease. While universally it has experienced a sort of ‘realification’ process through the abandonment of the principle emptio tollit locatum, lease of land in England began life as a mere personal right, but by the close of the Middle Ages the leaseholder had a fully protected interest in the land, being able to recover the land against all persons who evicted him. In Scotland, the Leases Act 1449 conferred security of tenure on lessees by permitting them to remain on the land until the end of their leases, even if the landlord sold the property. In continental Europe, the prin- ciple ‘sale does not break hire’ triumphed with the great codifications at the turn of the nineteenth century, but it was already widely accepted in Roman-Dutch law. However, not all legal systems came to the logical conclusion of recognising lease as a real right in land. In many legal systems the right of the lessee is still commonly classified as a mere personal right, or at least is considered as a sort of ‘hybrid’. In any case, legal systems invariably seem to recognise the need for real rights (enforceable against third parties) that have a fixed duration. Sometimes the same tool answers all needs: in England, a lease of land may be from year to year or for ninety-nine or even for 300 years. In other countries, leases are used for creating short-time interests (in Italy, for instance, a contract of lease cannot be stipulated for a period exceeding thirty years (Civil Code, art. 1573)) and thus the functional equivalents of the English lease include lease and superficies as well as emphyteusis. The real point of difference concerns lifelong time-limited interests. In England, the common law (in the narrow sense in which it is con- trasted with equity) has since 1925 recognised only two estates, namely the perpetual fee simple and the lease. The problem with settlement of land was that the splitting up of the fee simple estate over time meant that there was no one person for the time being who was independently capable of giving an absolute title and thus being able to effec- tively manage that land. In a well-drawn settlement, these difficulties were often overcome by the grantor using a trust, under which he would convey the fee simple to trustees with a direction or power to sell, lease, mortgage and 1 Patault, Introduction historique, p. 33. © in this web service Cambridge University Press www.cambridge.org Cambridge University Press 978-1-107-02612-4 - Time-Limited Interests in Land Edited by Cornelius van der Merwe and Alain-Laurent Verbeke Excerpt More information 6 introduction and context so on and to allow the family members to take an equivalent benefit from the proceeds of sale, a process known as ‘overreaching’. It was this device that the draftsman of the 1925 legislation adopted. Indeed, all that the statute did was to make good conveyancing practice compulsory. Thus from 1925 onwards the splitting up of the enjoyment of land over time was still a possibility. The only difference was that it now had to be done behind a trust containing powers for the beneficial interests to be overreached.2 The functional equivalent of the civilian usufruct, life estate, can now exist only behind the curtain of a trust. The English story is an instruc- tive lesson for civil law countries. Usufruct may be a problem for effective management of the land. This may be an explanation for the relative decline in the use of usufruct in many civil law systems.